The addition is part of Schwab's strategy of positioning
itself firmly in the middle, in terms of features and price, between full-service brokerage houses and bargain online trading services. Schwab, however, is at a competitive disadvantage in that it charges $29.95 per trade--more than many online trading services--and is playing catch-up to E*Trade, which added research services to its mutual fund area in November.

"We think there will always be a small segment of the population that is
focused on price only," said Art Shaw, Schwab senior vice president of electronic
brokerage. "We're trying to provide the right value, the right service, information, price, and tools that customers really want. Price is an important component, but it's only a component."

Analysts tend to support Schwab's strategy.

"This would seem to be their only option at this point," said Vernon Keenan, a director at Zona Research. "Essentially, this is raising
their competitiveness to the standard set by some of the other brokerages,
specifically E*Trade."

"Most investors are not going to rationally care if a trade costs $15 or if
it costs $20. They're going to care if they picked the stock at the right
price and made money," pointed out Keith Benjamin, an analyst with Banc America Robertson Stephens.

Schwab, along with all online brokerage houses, is regrouping following widespread complaints about access problems and trading delays that
plagued investors during record-setting-volume trading days in late October. E*Trade announced last month that it will spend $20 million upgrading its architecture in order to add capacity on heavy trading days.

Schwab says that it also has been upgrading its capacity during the last year
in an effort to accommodate its active online accounts, which have grown from 336,000 in 1996 to 1.2 million today, representing almost a third of Schwab's total
retail accounts.

Both Keenan and Benjamin called today's news a "defensive" maneuver. Keenan
also noted that, in order to be competitive in 1998, Schwab eventually will have to expand its financial services into the online banking arena as well.

"Financial services that have built up an online infrastructure are
positioned to move into that market ," Keenan said. "Schwab may have to [move to online banking] in order to look for growth in the
face of increased price competition."